It’s no secret that there is a chronic housing shortage in the UK at the moment. The average estate agent typically has 42 homes on their books per branch but currently in London, where the housing shortage is at its most severe and concentrated, there are just 33.
The Prime Minister recently indicated that developers are to blame for the lack of housing in the UK, which is impeding millennials from stepping foot on the property ladder, but just how much truth is there behind her statements?
A vicious cycle
At present, land with planning permission for housing costs around £6 million per hectare. These steep rates are perhaps the reason why the Prime Minister feels that developers are to blame for the housing shortage in the UK. There is a lot of speculation that developers hoard land once they have purchased it, sit on it for a while until they obtain planning permission and then sell the land on for significantly more than what was originally paid.
There are also issued being raised regarding the bonus structures that many construction firms use, which mean that development bosses are cashing in on commission not on the number of houses that they build, but on their profits or share price. This could go some way to explain why many construction firms lack the incentive that is needed to build more houses and address the UK shortage.
This problem isn’t anything new either. An investigation by The Guardian in 2015 revealed that a staggering 600,000 plots with planning permission were owned by some of the largest property builders in the UK, but weren’t being built on.
Steps to change
In an attempt to deliver the homes that the UK needs, the Prime Minister has implemented reforms to the National Planning Policy Framework, which will see the use of land being maximised, protections for the Green Belt being strengthened and a greater emphasis being put on transforming planning permission into new homes.
But just how much of an impact will these changes have? They seem to have been met by stiff opposition by some interested parties, who feel that involving and empowering councils is a better course of action to take, but only time will tell whether the Prime Minister’s decisions will mend the draught that is currently stifling the UK property market.
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